It’s a new year, and resolutions abound. One that banks can put at the top of their lists: moving towards zero operations, which means using the power of people and technology to make customer experiences seamless while at the same time eliminating unnecessary operational processes and costs from the back end. As artificial intelligence (AI) and machine learning (ML) begin to eclipse human capabilities in some tasks, banks can use these technologies to decouple revenue from headcount and become more efficient and better competitors in a tech-forward financial industry.
Zero operations is still a relatively new concept for banks and other financial institutions. It’s aspirational. But savvy players have started the journey and are already seeing impressive gains.
The value proposition
The business case for moving towards zero operations is compelling. In the U.S., mid-sized banks can expect to achieve a 2-3% cost-income ratio reduction, equivalent to $250 million to $750 million in incremental annual value by moving towards zero operations*. That translates into a post-market capitalization increase of $6 billion to $8 billion. ZeroOps transformations become even more attractive given they are self-funding, enabled by Accenture’s significant investments in scalable capabilities and financial partnering.
The benefits go beyond the bottom line. Zero operations can deliver better client experiences, drive sustainability, strengthen talent, and foster inclusion and diversity.
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Three steps to zero operations
We break down the journey towards zero operations into three steps: rebalancing the human plus machine workforce, leveraging operational data to drive newly possible business value and rethinking global talent strategy. Each step on its own can generate material business benefits, but banks that pursue all three get the best returns and generate the most value.
Rebalancing the human plus machine workforce doesn’t mean automating everything, it means finding ways to improve productivity. Banks can get the most value from their people by allowing them to focus on complex customer-facing tasks while using AI/ML infused machines to automate core operational processes. As RPA has matured and AI/ML techniques have increasingly exceeded select human cognitive abilities, the art of the possible today for machines is significant ahead of what was possible just a couple of years ago. By reducing manual activities at scale, banks can free up their workers to do more of the work they enjoy and find rewarding.
In one case, a North American mortgage company sped up the turn-around times for loan decisions by using Accenture’s SynOps platform to streamline loan documentation and pre-purchase audit processes. The company unlocked $60 million in bottom-line savings in underwriting and documentation costs. They also saw a five-fold increase in the number of new loans originated, and a 43% reduction in application turnaround time. Key to the success of this program was that the new platform was able to reside on top of existing technology which means the company didn’t have to worry about the expense and complexity of changing their technology stack.
Once the right level of automation in place, banks can leverage insights into their operational data to drive newly possible business value. Data can be used to reduce fraud, increase customer satisfaction and upsell or cross-sell products. The operations team at one large Global bank saw productivity gains of 40% across multiple processes like payments and factoring, and reduced error rates to less than 1%. At another bank, predictive analytics helped identify pre-closure loan exposure of $2bn allowing relationship managers to pro-actively engage clients on additional services.
The last step in the journey towards zero operations is rethinking global talent strategy. That means having the right people and vendors in the right locations enabled with the right skills. The right strategy can deliver between 15% and 20% in cost savings and a reskilled workforce which can then be deployed for automation and growth-focused initiatives.
Consider the case of a bank that reconfigured its operations to tap into a global talent model. It transferred a number of bank professionals to a NewCo owned by Accenture across multiple locations. The bank also upskilled its employees on new ways of working and systems. Combining the global talent strategy with automation and analytics, the bank cut operating costs by 20-30%.
As the above examples show, these three levers of ZeroOps have the potential to drive significant value creation for banks.
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By taking the initiative, banks can increase the bottom line, free up their people to do more interesting work. How can you tell if it’s the right move for you? Ask these questions:
- What is the potential value creation for my organization?
- What is the art of the possible for my human and machine workforce?
- Which new business outcomes are becoming possible today through insights from operational data?
- How do I build a future-ready talent pool?
Moving towards zero operations creates significant value and strategic capability. Leading banks are making it a priority for 2022.
*Based on research done by Accenture